Tony Lodge is a Research Fellow at the Centre for Policy Studies and author of Rail’s Second Chance – putting competition back on track.
Labour’s latest Shadow Transport Secretary, Andy McDonald, told the Guardian this month that train overcrowding was a “national disgrace”. He went on to explain that overcrowding on trains had reached record levels and that it would get worse.
McDonald is the fourth Shadow in this role in as many years. He is the latest choice by Corbyn to push the case for railway renationalisation, strengthen links between Labour and the rail unions, and keep hitting away at Europe’s fastest growing railway network.
Firstly, it is important to appreciate the revival of rail travel in the UK which in part explains why trains are busy. Passenger journeys on the network have more than doubled since privatisation, from 735 million in 1994 to 1.7 billion in 2016 and have almost trebled since the 1982 post-war slump. The railways have not been this popular since the 1920s, but trains are now running on a network less than half the size. A key challenge here is the more efficient and better operation of the network. This allows us to deliver longer and more frequent trains by better managing the capacity which governs how many can be on the tracks at any one time.
As unemployment continues to fall and cities continue to grow, demand on train travel will also rise. Latest rail stats show morning peak crowding on trains was highest in London, where 5.7 per cent were over-capacity, followed by Manchester (3.5 per cent) and Leeds (2.7 per cent). Morning peak passengers arriving into central London have increased each year since 2010, which correlates with jobs growth in Greater London since 2010 of over 600,000.
Labour and the rail unions hide behind their magic solution – renationalisation. They claim it would deliver improved services, better stations, more trains, lower fares and less waste, but refuse to provide real detail for what would be a huge financial and policy task.
The cost of a full-blown renationalisation as proposed would run into the tens of billions of pounds. One of the reasons for this is that the value of the railways’ estate has risen considerably since privatisation in the mid-1990s. Network Rail, which is in charge of rail infrastructure, is in Government hands. But private rail companies own and operate the rolling stock. There is also considerable third-party capital invested in rail freight facilities on Network Rail land. This would all need to be paid for.
The compensation and cost of returning rail passenger and freight operations to a publicly-owned company would require a new Act of Parliament to replace the Railways Act 1993, which would need a Labour general election victory. The easiest option would be to let rail franchise agreements expire and then take them under public control. However, many new franchises will be renewed in the latter part of this decade, thus necessitating sweeping post-2020 legislation to immediately renationalise. This would require significant compensation pay-outs to franchise holders as contracts are prematurely axed.
A staggered renationalisation process, whereby some franchises are taken back but some left in private hands until their term ends, would not be much better. It would mean an expensive and costly fracturing of the network that would leave some intercity routes in public hands and some not. This would remove the incentive for any private operators, with their term winding down, to do the best for passengers. They certainly wouldn’t have any reason to deliver the necessary infrastructure and service investments. Passengers and taxpayers would lose out.
Whitehall would, in effect, need to buy back all passenger rolling stock; the same would apply to freight rolling stock and locomotives. Companies would again need to be compensated for rolling stock construction and leasing orders they have placed and subsequently lost.
The elephant in the room remains Labour’s link with Aslef and the RMT, who have enjoyed the sign-off on Labour rail policy for nearly ten years. Importantly, they have spent the last 18 months bringing mayhem to the lives of Southern rail passengers in a dispute which has now lasted longer than the 1984/5 miner’s strike and shows little sign of being resolved. Both RMT and ASLEF will no doubt regard this bitter dispute, which has seen 33 intermittent strike days and an overtime ban, as a successful test case. The strike is timed to cause maximum disruption to the timetable and the rejection by train drivers of a 24 per cent pay rise, taking salaries to £60,000, illustrates the deadlock.
The roots of this dispute lay with Whitehall designing and letting a franchise which was simply too big. Previously it had been a number of competing franchises but in 2015 Southern, Thameslink, Great Northern and Gatwick Express were merged under the GTR umbrella making it the largest franchise in terms of passengers, staff and trains in the UK. Consequently, when the unions strike passengers have no alternative operator and suffer.
Labour will repeatedly complain about the railways and repeat their nationalisation mantra despite a growing and safe railway with all the challenges this presents. But it is the Southern rail dispute which should really concern passengers and policymakers. It is here where bad policymaking has unwittingly conspired with Labour’s union sponsors to undermine Britain’s biggest rail franchise – it is arguably a trial run of how the unions would seek to muscle in on any future nationalised railway.
Conservatives must expose this and deliver a better and more competitive railway.